Veteran financial analyst Dick Bove, with Rochdale Securities, sent out a research report Monday morning calling the SEC’s case against Goldman Sachs weak, but says the events of Friday could be setting the stage for another financial system collapse.
Bove also told CNBC Saturday the media had only covered one side of the story and characterized the SEC case as basically a demand story.
The Goldman product in question “was not a retail product sold to unsophisticated investors. This was a product in high demand by sophisticated investors,” he said in the research note. “The best example of this is that they bought billions of dollars in this and other like instruments.”
Bottom line, these “sophisticated” investors that brought the product knew the risks involved.
Goldman Sachs apparently created the desired securities “to meet the demand of both sides of the markets,” Bove said.
"Institutional investors (notably pension funds) needed to purchase instruments with high risk adjusted returns," he said.